Powerpoint Presentation by Charlie Cook

PowerPoint Presentation by Charlie Cook
Copyright © 2004 South-Western. All rights reserved.

Objectives
After studying this chapter, you should be able to:
1. Explain the purposes of performance appraisals
and the reasons they can sometimes fail.
2. Identify the characteristics of an effective appraisal
program.
3. Describe the different sources of appraisal
information.
4. Explain the various methods used for performance
evaluation.
5. Outline the characteristics of an effective
performance appraisal interview.
Copyright © 2004 South-
Western. All rights reserved. 8–2
Performance Appraisal and Other HRM Functions
Performance
Performanceappraisal
appraisaljudges
judges Quality
Qualityof
ofapplicants
applicants
effectiveness of recruitment
effectiveness of recruitment Recruitment
Recruitment determines
determinesfeasible
feasible
efforts
efforts performance
performancestandards
standards
Selection
Selectionshould
shouldproduce
produce
Performance
appraisal Selection
Selection workers
workers best ableto
best able tomeet
meet
validates
validates selectionfunction
selection function job requirements
job requirements
Training
Trainingand
anddevelopment
development
Performance
appraisal Training
Trainingand
and aids
aids achievementof
achievement of
determines
determines trainingneeds
training needs Development
Development performance standards
performance standards
Performance
appraisalisisaa Compensation
Compensation Compensation
Compensationcancanaffect
affect
factor
factorin
indetermining
determiningpay
pay Management appraisal of performance
appraisal of performance
Management
Appraisal
Appraisalstandards
standardsand
and
Performance appraisal justifies
Performance appraisal justifies Labor Relations methods may be subject to
personnel
personnelactions
actions
Labor Relations methods may be subject to
negotiation
Copyright © 2004 South- negotiation
Western. All rights reserved. 8–3 Presentation Slide 8–1

Performance Appraisal
Appraisal
Appraisal Programs
Programs
Administrative
Administrative Developmental
Developmental
Compensation
Compensation Ind.
Ind.Evaluation
Evaluation
Job
JobEvaluation
Evaluation Training
Training
EEO/AA
EEO/AASupport
Support Career
CareerPlanning
Planning
Purposes for Performance Appraisal

Figure 8.1
Reasons Appraisal Programs Fail
• Lack of top-management
information and support
• Unclear performance
standards
• Rater bias
• Too many forms to complete
• Use of the appraisal
program for conflicting
purposes.
Managerial Issues Concerning Appraisals
• Managers feel that little or no benefit will be

derived from the time and energy spent in the
process.
• Managers dislike the face-to-face confrontation
of appraisal interviews.
• Managers are not sufficiently adept in providing
appraisal feedback.
• The judgmental role of appraisal conflicts with
the helping role of developing employees.
Common Appraisal Problems
• Inadequate preparation • Inconsistency in ratings
on the part of the among supervisors or
manager. other raters.
• Employee is not given • Performance standards
clear objectives at the may not be clear.
beginning of performance • Rating personality rather
period. than performance.
• Manager may not be able • The halo effect, contrast
to observe performance effect, or some other
or have all the perceptual bias.
information.
Common Appraisal Problems (cont’d)
• Inappropriate time span • Organizational politics or
(either too short or too personal relationships
long). cloud judgments.
• Overemphasis on • No thorough discussion of
uncharacteristic causes of performance
performance. problems.
• Inflated ratings because • Manager may not be
managers do not want to trained at evaluation or
deal with “bad news.” giving feedback.
• Subjective or vague • No follow-up and coaching
language in written after the evaluation.
appraisals.
Let me
count the Manager
Manager
ways… lacks Lack
Lackofof
lacks
information appraisal
appraisal
information
Insufficient skills
skills
Insufficient
reward
rewardfor
for
performance
performance Manager
Managernot
not
taking
taking
appraisal
appraisal
seriously
seriously
Performance
Performance
Unclear appraisals
Unclear
language
appraisalsfail
fail
language because…
because…
Manager
Managernot
not
prepared
prepared
Ineffective
Ineffective
discussion
discussionof of Employee
Employeenot
not
employee
employee receiving
receiving
development Manager
development Managernot
not ongoing
ongoing
being honest
being honest feedback
or feedback
orsincere
sincere
Why Appraisal Systems Are Ineffective
• Inadequate preparation on the part of the

manager.
• Employee is not given clear objectives at the
beginning of performance period.
• Manager may not be able to observe
performance or have all the information.
• Performance standards may not be clear.
• Inconsistency in ratings among supervisors or
other raters.
Sources: Patricia Evres, “Problems to Avoid during Performance Evaluations,” Air Conditioning, Heating & Refrigeration News 216, no.
16 (August 19, 2002): 24–26; Clinton Longnecker and Dennis Gioia, “The Politics of Executive Appraisals,” Journal of Compensation and

Benefits 10, no. 2 (1994): 5–11; “Seven Deadly Sins of Performance Appraisals,” Supervisory Management 39, no. 1 (1994): 7–8. Figure 8.2a
(cont’d)
• Rating personality rather than performance.
• The halo effect, contrast effect, or some other
perceptual bias.
• Inappropriate time span (too short or too long).
• Overemphasis on uncharacteristic performance.
• Inflated ratings because managers do not want to
deal with “bad news.”
• Subjective or vague language in written
appraisals.

Benefits 10, no. 2 (1994): 5–11; “Seven Deadly Sins of Performance Appraisals,” Supervisory Management 39, no. 1 (1994): 7–8. Figure 8.2b
(cont’d)
• Organizational politics or personal relationships
cloud judgments.
• No thorough discussion of causes of
performance problems.
• Manager may not be trained at evaluation or
giving feedback.
• No follow-up and coaching after the evaluation.


Benefits 10, no. 2 (1994): 5–11; “Seven Deadly Sins of Performance Appraisals,” Supervisory Management 39, no. 1 (1994): 7–8. Figure 8.2c
Establishing Performance Standards
Criterion contamination:
Elements that affect the
appraisal measures that
are not part of the actual
performance Performance
measures Reliability:
Measures that are
consistent across
Strategic relevance: raters and over
Performance standards Zone of valid time
linked to organizational assessment
goals and competencies
Criterion deficiency:
Aspects of actual performance
Actual
that are not measured
performance
Copyright © 2004 South- Figure 8.3

Performance Standards Characteristics
Strategic
Strategic Individual
Individualstandards
standardsdirectly
directly
Relevance
Relevance relate
relateto
tostrategic
strategicgoals.
goals.
Criterion
Criterion Standards
Standardscapture
captureall
allof
ofan
an
Deficiency
Deficiency individual’s
individual’scontributions.
contributions.
Criterion
Criterion Performance
Performancecapability
capabilityis
isnot
not
Contamination
Contamination reduced
reducedby
byexternal
externalfactors.
factors.
Reliability
Reliability Standards
Standardsare
arequantifiable,
quantifiable,
(Consistency)
(Consistency) measurable,
measurable,and
andstable.
stable.
Compliance with the Law
• Brito v Zia
 The Supreme Court ruled that performance
appraisals were subject to the same validity
criteria as selection procedures.
• Albemarle Paper Company v Moody
 The U.S. Supreme Court found that employees
had been ranked, against a vague standard, open
to each supervisor’s own interpretation.

Legal Guidelines for Appraisals
• Performance ratings must be job-related.
• Employees must be given a written copy of their job
standards in advance of appraisals.
• Managers who conduct the appraisal must be able to
observe the behavior they are rating.
• Supervisors must be trained to use the appraisal form
correctly.
• Appraisals should be discussed openly with employees
and counseling or corrective guidance offered.
• An appeals procedure should be established to enable
employees to express disagreement with the appraisal.
Alternative Sources of Appraisal

Western. All rights reserved. 8–18 Figure 8.4
Sources of Performance Appraisal
• Manager and/or Supervisor

 Appraisal done by an employee’s manager and
reviewed by a manager one level higher.
• Self-Appraisal Performance
 By the employee being evaluated, generally on an
appraisal form completed by the employee prior to
the performance interview.
• Subordinate Appraisal
 Appraisal of a superior by an employee, which is
more appropriate for developmental than for
administrative purposes.
Sources of Performance Appraisal
• Peer Appraisal
 Appraisal by fellow employees, compiled into a
single profile for use in an interview conducted by
the employee’s manager.
• Team Appraisal
 Appraisal, based on TQM concepts, recognizing
team accomplishment rather than individual
performance.
• Customer Appraisal
 Appraisal that seeks evaluation from both external
and internal customers.
Alternative
AlternativeSources
Sourcesof
of
Performance
PerformanceAppraisal
Appraisal
Supervisor
Team
Peers
Self
Customers
Copyright © 2004 South-Subordinates

Pros and Cons of 360-Degree Appraisal
• PROS
 The system is more comprehensive in that responses are
gathered from multiple perspectives.
 Quality of information is better. (Quality of respondents is
more important than quantity.)
 It complements TQM initiatives by emphasizing
internal/external customers and teams.
 It may lessen bias/prejudice since feedback comes from
more people, not one individual.
 Feedback from peers and others may increase employee
self-development.
Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360-Degree Feedback Gone Amok?” Academy of Management
Executive 12, no. 2 (May 1998): 86–94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360-Degree Feedback Negatively Affect Company
Performance?” HRMagazine 47, no. 6 (June 2002): 54–59; Maury Peiperl, “Getting 360-Degree Feedback Right,” Harvard Business Review 79, no. 1 (January

2001): 142–47; Jack Kondrasuk, Mary Riley, and Wang Hua, “If We Want to Pay for Performance, How Do We Judge Performance?” Journal of Compensation
and Benefits 15, no. 2 (September/October 1999): 35–40; Mary Graybill, “From Paper to Computer,” The Human Resource Professional 13, no. 6 (November/
December 2000): 18–19; David W. Bracken, Lynn Summers, and John Fleenor, “High-Tech 360,” Training and Development 52, no. 8 (August 1988): 42–45; Gary
Western. All rights reserved.

Meyer, “Performance Reviews Made Easy, Paperless,” HRMagazine 45, no. 10 (October 2000): 181–84.
8–22 Figure 8.5a
Pros and Cons of 360-Degree Appraisal
• CONS
 The system is complex in combining all the responses.
 Feedback can be intimidating and cause resentment if
employee feels the respondents have “ganged up.”
 There may be conflicting opinions, though they may all be
accurate from the respective standpoints.
 The system requires training to work effectively.
 Employees may collude or “game” the system by giving
invalid evaluations to one another.
 Appraisers may not be accountable if their evaluations are
anonymous.
Sources: Compiled from David A. Waldman, Leanne E. Atwater, and David Antonioni, “Has 360-Degree Feedback Gone Amok?” Academy of Management
Executive 12, no. 2 (May 1998): 86–94; Bruce Pfau, Ira Kay, Kenneth Nowak, and Jai Ghorpade, “Does 360-Degree Feedback Negatively Affect Company
Performance?” HRMagazine 47, no. 6 (June 2002): 54–59; Maury Peiperl, “Getting 360-Degree Feedback Right,” Harvard Business Review 79, no. 1 (January

2001): 142–47; Jack Kondrasuk, Mary Riley, and Wang Hua, “If We Want to Pay for Performance, How Do We Judge Performance?” Journal of Compensation
and Benefits 15, no. 2 (September/October 1999): 35–40; Mary Graybill, “From Paper to Computer,” The Human Resource Professional 13, no. 6 (November/
December 2000): 18–19; David W. Bracken, Lynn Summers, and John Fleenor, “High-Tech 360,” Training and Development 52, no. 8 (August 1988): 42–45; Gary

Meyer, “Performance Reviews Made Easy, Paperless,” HRMagazine 45, no. 10 (October 2000): 181–84.
8–23 Figure 8.5b
360-Degree Performance Appraisal System
Integrity Safeguards
• Assure anonymity.
• Make respondents accountable.
• Prevent “gaming” of the system.
• Use statistical procedures.
• Identify and quantify biases.

Training Performance Appraisers
Common
Common rater-related
rater-related errors
errors
Error
Error of
of central
centraltendency
tendency
Leniency
Leniencyor
orstrictness
strictnesserrors
errors
Similar-to-me
Similar-to-meerrors
errors
Recency
Recencyerrors
errors
Contrast
Contrast and
and halo
halo errors
errors
Rater Errors
• Error of Central Tendency

 A rating error in which all employees are rated
about average.
• Leniency or Strictness Error
 A rating error in which the appraiser tends to give
all employees either unusually high or unusually
low ratings.
• Recency Error
 A rating error in which appraisal is based largely
on an employee’s most recent behavior rather than
on behavior throughout the appraisal period.
Rater Errors
• Contrast Error
 A rating error in which an employee’s evaluation
is biased either upward or downward because of
comparison with another employee just
previously evaluated.
• Similar-to-Me Error
 An error in which an appraiser inflates the
evaluation of an employee because of a mutual
personal connection.

Trait Methods
Graphic
GraphicRating
Rating
Scale
Scale
Mixed
MixedStandard
Standard
Scale
Scale
Trait
Trait
Methods
Methods
Forced-Choice
Forced-Choice
Essay
Essay

Trait Methods
• Graphic Rating-Scale Method

 A trait approach to performance appraisal
whereby each employee is rated according to a
scale of individual characteristics.
• Mixed-Standard Scale Method
 An approach to performance appraisal similar to
other scale methods but based on comparison
with (better than, equal to, or worse than) a
standard.

Graphic Rating
Scale With
Provision For
Comments

HRM 2
8–30
Trait Methods
• Forced-Choice Method
 Requires the rater to choose from statements
designed to distinguish between successful and
unsuccessful performance.
• Essay Method
 Requires the rater to compose a statement
describing employee behavior.

Example Of A Mixed-standard Scale
Copyright
HRM 3
© 2004 South-
Behavioral Methods
Critical
CriticalIncident
Incident
Behavioral
BehavioralChecklist
Checklist
Behavioral
Behavioral
Methods
Methods Behaviorally
BehaviorallyAnchored
Anchored
Rating
RatingScale
Scale(BARS)
(BARS)
Behavior
BehaviorObservation
Observation
Scale
Scale(BOS)
(BOS)

Behavioral Methods
• Critical Incident
 An unusual event denoting superior or inferior
employee performance in some part of the job.
• Behaviorally Anchored Rating Scale (BARS)
 A performance appraisal that consists of a series
of vertical scales, one for each dimension of job
performance.
• Behavior Observation Scale (BOS)
 A performance appraisal that measures the
frequency of observed behavior.
Examples Of A Bars For Municipal Fire Companies
FIREFIGHTING STRATEGY: Knowledge of Fire Characteristics.

Source: Adapted from Landy, Jacobs, and Associates. Reprinted with permission.
8–35 HRM 4
Sample Items From Behavior Observation Scales

Western. All rights reserved. 8–36 HRM 0
Results Methods
• Management by Objectives (MBO)

 A philosophy of management that rates
performance on the basis of employee
achievement of goals set by mutual agreement of
employee and manager.

Performance Appraisal under an MBO Program
Management by Objectives

Summary of Appraisal Methods
ADVANTAGES DISADVANTAGES
Inexpensive Potential for error
TRAITS Meaningful Poor for counseling
Easy to use Poor for allocating rewards
Poor for promotional decisions
Specific dimensions Time consuming

BEHAVIOR Accepted by employees Costly
Useful for feedback Some rating error
OK for reward/promotion
Less subjectivity bias Time consuming

Accepted by employees Focus on short term
RESULTS
Performance-reward link Criterion contamination
Encourages goal setting Criterion deficiency
Good for promotion
decisions
The Balanced
Scorecard
Source: Robert Kaplan and David

Norton, “Strategic Learning and the
Balanced Scorecard,” Strategy &
Copyright © 2004 South- Leadership 24, no. 5 September/

October 1996): 18–24.
Western. All rights reserved. 8–40 HRM 6

Personal
Personal
Scorecard
Scorecard

Source: Robert Kaplan and David Norton, “Using the Balanced Scorecard as a Strategic

Management System,” Harvard Business Review (January–February 1996): 75–85.
8–41 HRM 7
Summary of Appraisal Methods
• Trait Methods
 Advantages
 Are inexpensive to develop
 Use meaningful dimensions
 Are easy to use
 Disadvantages
 Have high potential for rating errors
 Are not useful for employee counseling
 Are not useful for allocating rewards
 Are not useful for promotion decisions

Western. All rights reserved. 8–42 Figure 8.7a
Summary of Appraisal Methods (cont’d)
• Behavioral Methods
 Advantages
 Use specific performance dimensions
 Are acceptable to employees and superiors
 Are useful for providing feedback
 Are fair for reward and promotion decisions
 Disadvantages
 Can be time-consuming to develop/use
 Can be costly to develop
 Have some potential for rating error

Western. All rights reserved. 8–43 Figure 8.7b
Summary of Appraisal Methods (cont’d)
• Results Methods
 Advantages
 Have less subjectivity bias
 Are acceptable to employees and superiors
 Link individual to organizational performance
 Encourage mutual goal setting
 Are good for reward and promotion decisions
 Disadvantages
 Are time-consuming to develop/use
 May encourage short-term perspective
 May use contaminated criteria
 May use deficient criteria
Western. All rights reserved. 8–44 Figure 8.7c
Types of Appraisal Interviews
Appraisal
Appraisal Interview
Interview Formats
Formats
Tell
Telland
andSell
Sell --persuasion
persuasion
Tell
Telland
andListen
Listen-- nondirective
nondirective
Problem
Problem solving-
solving- focusing
focusingthe
the
interview
interview on
on problem
problem resolution
resolution
and
andemployee
employeedevelopment
development

Appraisal Interview Guidelines
Invite
InviteParticipation
Participation Ask
Askfor
forSelf-Assessment
Self-Assessment
Change
ChangeBehavior
Behavior Problem
Problem Solving
SolvingFocus
Focus
Minimize
MinimizeCriticism
Criticism Express
ExpressAppreciation
Appreciation
Establish
EstablishGoals
Goals Be
BeSupportive
Supportive
Follow
Follow Up UpDay
Day bybyDay
Day
Factors That Influence Performance

Performance Diagnosis

Source: Scott Snell, Cornell University.
8–48 HRM 8

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Western. All rights reserved. 8–3 Presentation Slide 8–1

Copyright © 2004 South-

• Managers feel that little or no benefit will be

• Inadequate preparation on the part of the

Western. All rights reserved. 8–11

Western. All rights reserved. 8–12

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Western. All rights reserved. 8–13

Copyright © 2004 South- Figure 8.3

Western. All rights reserved. 8–14 Presentation Slide 8–3

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• Manager and/or Supervisor

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• Error of Central Tendency

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• Graphic Rating-Scale Method

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• Management by Objectives (MBO)

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Specific dimensions Time consuming

Less subjectivity bias Time consuming

Source: Robert Kaplan and David

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